Looks Like a Million To Me: How I Realized that Amazon’s Kindle and Sony’s E-Reader Were Exceeding Sales Estimates

[A Full Disclosure Note From Evan] Let’s be clear from the start: Neither Amazon nor Sony have told me anything. I get nada, zilch, bupkis when I ask even the most circumspect questions about their respective device sales. If it has to do with Kindle or Reader, I get the standard “go away” line. I have not manipulated sales data, be it OUP’s or any other publisher. I have not analyzed Amazon or Sony ebook sales statistics or rankings. I have not found any secret documents. I have not broken into the vault, I have not cracked the code, I have not had prophetic dreams – well, not about any e-ink devices anyway…

What I do have is a subscription to DIGITIMES that has led me to some pretty outlandish and, I think, substantiated conclusions about Kindle and Sony Reader sales figures. Before you dismiss me as loopy check out the evidence…

When the Kindle first launched there were plenty of predictions about how it and its predecessor the Sony Reader would sell. Over time the chatter died down, halted partly by the Kindle going out of stock. At the end of April, the chatter returned and hit full volume after last week’s Book Expo America in Los Angeles. The catalyst was Jeff Bezos’ speech, which let out some tantalizing, yet cryptic information on ebook sales volume at the Kindle store. The chatter, as reported in the NY Times, has publishers and others speculating that Amazon has sold somewhere between 10,000 – 50,000 Kindles.

I think all the speculations are completely wrong. By my calculations, combined sales of the Amazon Kindle and the Sony Reader will be 1,000,000 units in 2008. This estimate is based on solid data.

The Evidence
Amazon and Sony both use the 6-inch electrophoretic display (EPD), also known as an e-ink screen. Both companies buy their EPD’s from Prime View International (PVI) of Taiwan. DIGITIMES, a daily news service covering the Taiwanese IT market, reported on April 18th, in a story entitled PVI EDP shipments to grow sharply in 2008, that PVI expects EPD module shipments to reach 120,000 units PER MONTH in the second half of 2008. It further explains that the unit price of the screens are $60-$70 per unit and that the current volume has been 60-80,000 units PER MONTH.

Also intriguing is the article’s claim that 60% of the EPDs go to Amazon and 40% go to Sony. This is an important factor as it implies that there is a market beyond Kindle – a very, very strong market. Taking the figures at face value, Sony was selling (or at least manufacturing) an average of 28,000 readers per month (I took 70,000 units as the average sold per month and then 40% of that). Using this monthly rate, the annual sales of the Sony Reader are at nearly 350,000 units. Using the same formula, Amazon is ordering an average of 42,000 units per month, which will add up to over 500,000 units sold this year.

With production ramping up to 120,000 units a month these numbers will look much better – to the tune of a combined 1.4 million units over 12 months! Even with the Kindle out of stock for a big chunk of the first and second quarter, combined sales of these two e-ink devices in 2008 will most likely top 1 million. If a million devices are out on the street looking to feed, and we know they primarily eat one kind of food, ebooks, then what must this mean for the ebook sales?

Jeff Bezos said last week that ebook sales in the Kindle store had hit 6% of book unit sales. What this means is that of the 125,000 titles available in the Kindle store, the sales of ebooks represented 6% of the sales of those same 125,000 titles in print formats. Another interesting thing that Bezos said was that Kindle buyers purchase at a rate of 2.5 times more than print book buyers… food for thought when thinking through your ebook strategy.

One can draw some ebook sales conclusions from this information. For example, the number 2 seller at the Kindle store is The Last Lecture by Randy Pausch. According to Bookscan, in 4 weeks this book has sold 784,158 units. For the sake of argument, lets ascribe 75,000 units (10% of total sales, a reasonable guess) to Amazon. If Kindle sales were 6%, then Amazon would have already sold 4,500 ebooks. That’s 4,500 people with Kindles buying a single title in 4 weeks!

While it’s clearly amazing that in one month an ebook can sell 4,500 units it is not the best way to calculate the ebook sales impact of Kindle and Reader. A better way to approach this is through good old-fashioned guess-timation. Taking stock of my own experience and the experiences of others I know, I found that ebook buying on either the Sony Reader or the Amazon Kindle ranges from 5 ebooks to over 100 ebooks. Assuming that anyone who buys an e-ink ebook reader is doing so to read ebooks, lets assume that 10 ebooks a year is a reasonable purchase estimate. Using this logic, we should see 10 million ebooks purchased for these two devices in 2008.

The IDPF estimates that in 2007 ebook sales income was $31,800,000 with the caveat that the actual retail income could be as much as double due to retailer discounts, so let’s assume that the sales actually totaled $60,000,000. If we use an average retail price of $12 per ebook sold, and if consumers will buy 10 ebooks a year, then they will spend $120 on average, per device. That would lead us to $120,000,000 in ebook sales for the Kindle and the Reader in 2008, double all ebook sales in 2007. (For those of you who cannot swallow the idea of 10 books purchased per device – cut it in half. The result is $60,000,000 in ebook sales – as much as last year!)

Success in technology, like everything else, leads to more success. It’s not uncommon to see five-fold growth the year following a successful technology product launch. Think iPod, think Wii, think Blackberry. Whole micro-economies emerge around products that range from accelerated content creation, and all sorts of aftermarket products and services. Versions 2.0 and beyond create better and better devices. The better the devices, the more accessories, the more content there is, and soon a whole world of business opportunity is rolling downhill picking up speed.

With this in mind, I can easily imagine the success of Kindle and Reader dramatically expanding next year and growing by a factor of five. If that happens, then the excitement of ebooks will also grow and average 20 per year and the formula leads to a completely new ebook economy. Five million devices and 20 ebooks per device would mean ebook sales of $1,200,000,000, which, by my estimation, is 1.3% of the current global book market of $90,000,000,000.

This reminds me of a comment I heard from a music industry executive at a conference a couple of years ago. “One day there was the iPod and iTunes. The next day 20% of our business was digital. The day after that more than 50% of our revenues came from digital music. Yeah, we believe in digital music now.”

I personally don’t see publishing becoming a 50% digital business as books and cd’s are completely different animals. But I sure can see that the 3% – 4% I once predicted isn’t such a crazy notion any more. And yes, I believe in ebooks.

Evan Schnittman is OUP’s Vice President of Business Development and Rights for the Academic and USA Divisions. His career in publishing spans nearly 20 years and includes positions as varied as Executive Vice President at The Princeton Review and Professor at New York University’s Center for Publishing. He lives in New Jersey with his wife and two children.

Recent Comments

Anita Bartholomew9th June 2008

One problem with your calculations is that you say that Bezos said Amazon’s sales of Kindle e-books amount to 6 percent of book unit sales. But Bezos never said this. What he said was that Kindle accounts for 6 percent of those books that are available in both print and electronic formats.

Not all books — or even the majority of books — are available in both formats. You need to find out what percentage are available for Kindle, then calculate 6 percent of that figure.

Very interesting but your assumptions are flawed. you assume that all of PVI’s E-ink production is shared between Sony and Amazon, ignoring the other makers of E-ink readers. I think you are overall correct, but that the numbers need to be reduced, at least as regards Sony and Amazon e-reader sales, by perhaps 20% to account for the other manufacturers.

Evan Schnittman9th June 2008

Anita:

I think we are saying the same thing.

I said ” What this means is that of the 125,000 titles available in the Kindle store, the sales of ebooks represented 6% of the sales of those same 125,000 titles in print formats.”

[…] Looks Like A Million To Me: How I Realized that Amazon’s Kindle and Sony’s E-Reader Were… – Evan Schnittman of OUP digs into some numbers […]

Evan Schnittman9th June 2008

Richard:

According to what I read, PVI only manufactures for Sony and Amazon – though I could be wrong. However, given that the iRex has a completely different screen size and the other players out there seem to be much smaller scale, I think 20% is way over-compensating.

Chris9th June 2008

Oh dear. Despite your claim that this is all based on ‘solid data’ there are lots of holes in your figures, quite a few huge assumptions and a lot of reliance on statistics and information gleaned from people with a vested interested (even if you don’t have one).

Starting at the beginning with just a few points.

“Amazon and Sony both use the 6-inch electrophoretic display (EPD)” from PVI [VESTED INTEREST]. But PVI manufacture 5 sizes of EPD screens. So when they claim to be shipping 60-80000 EPD units per month – there is no indication that all these are the 6″ model required by Amazon and Sony. In fact it is entirely possible that a very small fraction are for these particular ebook readers. The same goes for the projected growth to 120,000 units per month.

I would love to see how Amazon [VESTED INTEREST] got its 6% figure. Of course they’d never tell us but as we all know statistics can be made to tell any story and I can easily come up with a scenario that in one way of measurement has a 6% result yet in another has a 0.1%, from the same figures. Of course one is statistically flawed and one isn’t – it would be nice to be sure which method Amazon were using.

The IDPF [VESTED INTEREST] figures are interesting. The best thing about them is that they are upfront about the caveats they have about these figures. Given their own doubts it is hard to see that they consititute the ‘solid data’ you base your case on.

Where do you get the figure of $12 for an average ebook price?

Apart from all my worries about your figures, your assumptions and your calculations I would probably agree that the ebook market is on a rapid rise and 5% of the book market in 3-4 years time would be my estimate of growth.

BTW – I do worry that the new readers in allowing people to download/subscribe to newspapers and browse the web might mean that people never get round to reading books on these devices.

Chris

p.s. If your figures are anything like correct Amazon.com finances should soon show signs of them. 500,000 units at $350 is a LOT of money ($175M) and it should be possible to spot signs of it in the accounts.

[…] has happened, of course, is that The Fear of Piracy has stifled the business. Today, I read a lovely quote that summarizes and exemplifies the problem: This reminds me of a comment I heard from a music industry executive at a conference a couple of […]

Sharon9th June 2008

Interesting article, and I hope Kindle’s are selling like crazy! My only comment to you is about your rough estimate of Kindle owners downloading about 10 e-books a year…People that only buy 10 books a year are probably NOT buying Sony Readers or Kindles!
I work 50 hours a week and I can STILL plow through about 6 books A WEEK. I was one of the first 100 people to own a Sony Reader, but bought a Kindle 2 months ago since it is a better product and has more available titles. In 8 weeks, I’ve downloaded 15 free books and purchased about 30 books so far. Many great books are between 4 and 7 dollars, while bestsellers at Amazon run only 9.99. The Kindle is awesome and I look forward to its future incarnations, as well as improvements to E-Ink technology.

[…] anybody out there love their ereader? Well, guess so, according to this blog from Oxford University Press (OUP) USA. When Amazon launched the Kindle there predictions aplenty […]

Ayrkain9th June 2008

It’s really bizarre, but just watch the weirdos come out of the woodwork as soon as you say anything positive about the Sony Reader or the Kindle. It’s stunning how angry people get over the idea of these devices succeeding. I wonder if they work in the publishing industry or something?

[…] anybody out there love their ereader? Well, guess so, according to this blog from Oxford University Press (OUP) USA. When Amazon launched the Kindle there predictions aplenty […]

Paul Langley9th June 2008

First I think you, Anita, and Jeff Bezos are indeed saying the same thing about the 6% of sales of Kindle Books vs. Print Books.

And I think your theories and calculations are interesting estimates and rationally thought out.

Lastly I’m with Sharon – I can’t imagine that anyone is going to buy a Sony reader or Kindle if they ONLY buy 10 to 12 books for it a year. Especially the Kindle – I say this first off because people that tend to buy Kindles are doing so for a variety of reasons one of them being wireless, another being the selection of books being offer by Amazon vs. Sony (4 or 5 times as many available).

While both readers can handle a multitude of free books from around the net those are in most cases classics and sci-fi books. So while I know of one person who boasts of never having purchased a book for his Kindle I suspect he is in the minority and that most people (myself included) are buying more like at least a book a week from Amazon as well as using the free books.

[…] Looks Like a Million To Me: How I Realized that Amazon?s Kindle and Sony?s E-Reader Were Exceeding S…Evan Schnittman of OUP takes a crack at divining Kindle and Sony E-Reader sales numbers. His guess is as good as anyone’s, and it has me thinking I need to take a closer look at Amazon’s balance sheet. […]

[…] Looks Like a Million To Me: How I Realized that Amazon’s Kindle and Sony’s E-Reader Were…Evan Schnittman of OUP takes a crack at divining Kindle and Sony E-Reader sales numbers. His guess is as good as anyone’s, and it has me thinking I need to take a closer look at Amazon’s balance sheet. […]

Evan, I might argue that hardware manufacturing/sales for both of these devices has yet to establish a solid pattern and there is probably some stock-piling of components. But if your numbers are correct (1 million units in 2008), I maintain that this surge is modest by hardware/software standards and falls way short of the mass market numbers that would generate a long-term sustained growth.

I believe Kindle is something of a diversion for Amazon — a disruption which allows them to funnel content into a proprietary format. If they aggregate enough content in the Kindle format, they will be in a position to impose that format on which ever manufacturer (Samsung, iPhone, Motorola, Sony, et al) succeeds with a true multi-media device.

Professional readers are as hungry for a legible and acceptable digital device as the any trade book consumer. But this audience is unlikely to make room in their shoulder bag for another device.

Given a smart phone and/or something altogether new in the way of a laptop that incorporates e-paper clarity and resolution, then I think the kind of digital growth that the music industry has sustained from iPod and iTunes will visit the book business.

“For example, the number 2 seller at the Kindle store is The Last Lecture by Randy Pausch. According to Bookscan, in 4 weeks this book has sold 784,158 units. For the sake of argument, lets ascribe 75,000 units (10% of total sales, a reasonable guess) to Amazon. If Kindle sales were 6%, then Amazon would have already sold 4,500 ebooks. That’s 4,500 people with Kindles buying a single title in 4 weeks!”

But Bezos said 6% of unit volume sales (I can’t find a transcript, but he said unit sales according to the D conference site’s blogger). You seem to be taking that 6% here as a per-book figure. But that doesn’t follow.

If we pretend that every Kindle owner, on average, buys 3 books a month (otherwise, they probably would have returned the thing or sold it before new supplies appear), then we get about 100,000 weekly sales.

The distribution of print book sales is the typical power-law curve, with a very very long tail at Amazon due to the ease of fulfillment. (I worked at Amazon briefly in 1996-1997, and I still think one of their most revolutionary innovations was making ordering books that weren’t in the top 200,000 sellers nationwide nearly as easy as ordering those more popular books.)

However, we don’t know that Kindle sales distribution follows the big head/magic middle/long tail model. It likely does to some extent, but I would argue that the relatively broad initial selection of 125,000 titles leads to the same kind of experimentation in purchasing works that led to the long tail in print book buying.

Because the Last Lecture has sold so well in print, it’s less likely that someone would purchase it on the Kindle, because their household may already have a print copy. The psychology to me would argue that less popular works of interest to Kindle owners are more likely to be purchased.

Thus, The Last Lecture appearing as #2 on the Kindle bestselling list might not give it the 6% of overall Kindle volume sales for the week that you attribute, but perhaps 1% or fewer.

If 100,000 books were sold in a recent week on the Kindle and those 125,000 titles sold (by inference) 1.6 million copies in print, my logic holds just fine. It could be 1 copy of each of 50,000 books and 1,000 copies of Last Lecture represent the long tail/big head.

Interesting reading, though, and I’m looking forward to more information from your sales department, too! They know what they’re selling to Amazon. I expect you can get some filtered and cleaned numbers about print sales overall and give us some insight there.

(When I worked at Amazon, I recall a call from Springer Verlag, which had a list of about 12,000 titles, if I recall correctly. In 1996, Amazon had moved from just-another-bookstore to their 95th percentile of all book buyers. I said, “and we’ll be in your top 5 this year [1997].” And I’m sure they did reach that.)

Linda W10th June 2008

I squirm a bit when you talk about ebook ‘sales’. Because from everything I’ve been told/read — they aren’t sales, but ‘licenses’. It’s not like you can donate the book to the library or sell it at a used-book-shop when you are done.

I’m not sure what the exact deal at each vendor is — but when you buy an ebook, I presume it can’t stay on your reader ‘forever’ — I don’t think the ebook’s space is self-upgrading fast enough (unlike Google’s advertised email storage limit, for example :-). So where do you put your old books? You can’t store them on a shelf. (A deficit and benefit depending on the book).

Can you put them on your computer and be able to browse or search through them later? For some books that’d be great, especially if you have a desktop-search indexing tool — imagine all the books you ever read, — type in a quote or a phrase and it could take you to the book stored in your computer.

But I’d like it more if I could use an Ebook reader with books from the library. The idea that I’d pay $10-12 for license to read 1 book — that I can’t resell or keep on a shelf (or burn for fire fuel)…that seems massively overpriced for most books.

Another good place would be for magazine and newspaper delivery. Content that is maybe designed to be more ‘ephemeral’ — where one can choose to set automatic space recovery “recover” old weather reports, sports, sales, ads, even the nightly news — no fixed ‘date’ on expiration — just as needed for space — with options to archive old material on flash plugins.

The most astonishing technology that has impressed me recently was the 8GB flash ‘drive’ that I got for my Sony-camera. It was new at the time and was still a bit pricey for long term storage, — certainly no where near the .4-1 dollar/GB rate you can get on hard disks. But — the astonishment for me — it was about the same size, slightly smaller maybe, than a US quarter! Maybe it was about 50% thicker — but it was ‘tiny’. Depending on how you count books, and whether or not you include pictures (and if color is supported or not), I suspect that tiny quarter would hold hundreds to thousands of books.

But that brings back another prob — most current ebook in proprietary, encrypted formats, that sorta locks you into 1 reader (and maybe 1 supplier) for the long-hall. And if you lose your e-book? It’s not like losing a paperback — but like losing 1000 of them. Books I want to ‘save’ and to ‘last’ for a while, I usually wrap in transparent alumin^h^h^h^h^h^hplastic shelving cover that comes in rolls. Covering that one lines draws with or shelves in a cupboard. I’ve dropped more than one book over the years — and thanked the stars when it was a protected book — on the ground during a rain. Never have dropped one in the toilet, but I’ve heard things like that happening for small personal electronics — phones, ipods…etc. I did have a cellphone get drenched by a sea wave while I was at the beach walking my dog. All sorts of accidents — so how are my books protected?

I’d really like an ebook reader I could just ‘load’ with all the books I’m reading or interested in at the time. I usually have up to several books I may be in — and even over longer periods of time, I’ll sometimes put a book down, but come back later and start again where I left the bookmark.

Anyway — I don’t like the current state of ‘Ebooks’ due to their downsides — I hope they improve, but our society has gotten wrapped up in IP and piracy concerns to the exclusion of technological and societal advance. There’s way more focus on how to ‘break apart’ previous sale models to extract more money out of a flat market where innovation is just ‘too hard’.

[…] Kindle … (Rebecca/OUPblog) Category: Techmeme | source article link Rebecca / OUPblog: Looks Like a Million To Me: How I Realized that Amazon’s Kindle and Sony’s E-Reader Were… — By Evan Schnittman … When the Kindle first launched there were plenty of […]

It is difficult for me to believe that there is a reasonable market for ebooks. The current readers make it difficult to absorb information, especially with technical books. And educational e-books are also difficult to deal with. I do not think that the e-book market will be significant until there is a better reader.

@Linda W: Most of the features you mentioned wanting are already available for the Kindle. You’re right, very often you don’t want to store a book on the Kindle forever. Thus Amazon lets you delete the book from the device and lets you redownload it from their server whenever you want. Several newspapers and magazines are already available for the Kindle. Only the other day I read Ellery Queen’s Mystery Mag on it (a sample issue). The pricing scheme is quite sensible as it allows you to read a sample of a book, or 2 weeks worth of a magazine or newspaper before committing to anything.
The part of this article that really stood out to me was where Jeff Bezos said that Kindle users buy books at 2.5 times the rate of other users. I’ve found this to be very true, because I find myself buying books every three or four days rather than every three or four weeks. It also helps that I don’t have to worry about storage space for these books as I can’t be sure of living in one place for a very long period. And of course there’s the sheer thrill of finding a book on one subject, getting obsessed with that subject, finding yet another book on it and downloading it instantly. You really ought to give it a shot.

As a pioneer in promoting the concept of the e-book, I’m a bit confused about why Amazon and the SONY reader people are not revealing how many Kindles and SONY readers have been sold and how many are in the pipeline. Perhaps they don’t want to publicize their success and shake up an industry that is facing a revolutionary challenge to their business model and give them more time to adjust to the juggernaut that is coming their way. I have long contended that once the e-book becomes user friendly and more and more readers discover that content trumps all, those who believe that the feel of the paper book and its long and familiar use will never be challenged will be on the losing side of history. The e-book has taken off big time and the pent up demand will be astonishing to publishers who have long believed that their cozy sinecures and old fashioned way of doing business would remain secure for all time. Having suffered through the early days of the e-book, even after I bet the bank and put all of my books in electronic formats, I am now quite comfortable that the e-book will one day become the instrument of choice for reading all forms of word content running the gamut from novels to textbooks, to illustrated books to combining music and video to accompany the words, and everything in between. Actually, the e-book could be a boon for publishers who might double their content production and save millions on production and warehousing costs allowing them to concentrate solely on the core business of providing content. They will also discover that readers will buy even more content if the wares are easy to obtain and cost a lot less. I have written several blogs on this topic, the most recent of which can be found here: http://warrenadler.blogspot.com/2008/05/e-book-has-arrived.html.

I certainly like the idea of ebooks but they have to be in a generic format so I can store them on my computer and search them as well as on the reader. I roll my own by cutting the backs off a paper book and running it through a sheet fed scanner – the Fujitsu Scan Snap – since you ask. Then I use Adobe Standard to OCR and mark up the result with searchable sticky notes. The free PDF-X-Change viewer duplicates the mark up tools available in Adobe Standard so you can make notes with either and read them in either program on multiple devices. I use an Asus eee for easy chair or in bed reading. A tablet PC at other times. Ellen Hage of http://www.techusers.org/ has been using ebooks for years and is a goldmine of experience. And yes proprietary is the big issue both with book format and hardware.

bestwish6th July 2008

Very good resources for both amazon kindle and sony ebook reader,this is useful to me.Thank you.

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Here is an interesting statistic this post got between 10 and 20 times more comments than the other posts that in itself says something. But June 2008 is a bit old, is there any plan to update the figures?

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